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#2259152 - 09/02/21 02:43 PM Self -employed (Personal account for business)
BSA2019 Offline
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Joined: Mar 2019
Posts: 14
Please help settle a debate here. We have seen an increase of personal accounts used for business purposes. At times we find evidence that the account was intended to be set up as a business account and the customer has a trade name affidavit. Ultimately the account is set as a sole-proprietorship and we move on.

A new scenario has presented itself with a customer listed as self-employed and depositing large sums of income from their work- some are saying this account should be set up as a sole-prop/non-individual account and the income is reportable and some are stating that a personal account applies and not SAR worthy because they are self-employed. What is the proper approach here?

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#2259153 - 09/02/21 03:01 PM Re: Self -employed (Personal account for business) BSA2019
BrianC Offline
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BrianC
Joined: Nov 2004
Posts: 6,011
Illinois
It's an operational decision what accounts you choose to offer to which types of customers. If you believe a customer is operating a business (regardless of how the business is organized) you have every right to require that person open a business account and pay the applicable fees associated with that account. For example, many institutions charge fees on business accounts based on the volume of cash being deposited and you could be missing out on that fee income because the customer opened a personal account. A customer does not need a trade name to run a business if they are operating as an independent contractor using their own name.

The SAR discussion is not relevent to whether the account is a business account or a personal account. Either the volume of cash being deposited is suspicious based on the anticipated and expected activity for the customer or it is not suspicious. I don't see how the type of account has any relevace to that discussion.
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#2259162 - 09/02/21 04:25 PM Re: Self -employed (Personal account for business) BSA2019
ColoradoAML Offline
100 Club
Joined: Mar 2018
Posts: 233
I agree with Brian that the type of account shouldn't factor in to whether a SAR is filed. However, we do consider this a BSA compliance issue to be resolved because we profile businesses and individuals differently, so significant amounts of business activity in a personal account will trigger unnecessary alerts and cause other obstacles in our monitoring and CDD/EDD process. Business activity here must be conducted through a business account.

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#2259175 - 09/02/21 06:48 PM Re: Self -employed (Personal account for business) BSA2019
praBSA Offline
Gold Star
Joined: Aug 2018
Posts: 269
Agree with all of the above. We have seen an uptick in individuals having a "side hustle" since the pandemic started. We require a business account to be opened if we catch it. If they don't switch, we will give them a 30 day letter and close their personal account. Alert scenarios generate differently for individuals and businesses here as well, it matters.

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